Primary agricultural credit society excluded from co-operative bank bar and remains eligible for deduction under income-tax law.

A primary agricultural credit society providing credit facilities to its members was treated as outside the exclusion in Section 80P(4) because it was not a co-operative bank. The distinction under Part V of the Banking Regulation Act, 1949 was applied: a primary co-operative bank is a co-operative society other than a primary agricultural credit society, so the statutory bar in Section 80P(4) is confined to co-operative banks. The society's bye-laws and activities showed member-based credit provision rather than banking character, and deduction under Section 80P(2) remained available.

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Issues: Whether a primary agricultural credit society carrying on credit activities for its members is excluded from deduction under Section 80P(2) of the Income-tax Act, 1961 by virtue of Section 80P(4), on the ground that it is a co-operative bank.

Analysis: The society was found to be a primary agricultural credit society and not a co-operative bank. The definitions in Part V of the Banking Regulation Act, 1949 were applied, particularly the distinction between a co-operative bank and a primary agricultural credit society. A primary co-operative bank is a co-operative society other than a primary agricultural credit society, and the statutory exclusion in Section 80P(4) is confined to co-operative banks. The Court also noted that the society's bye-laws and activities showed provision of credit facilities to members and not the character of a co-operative bank.

Conclusion: Section 80P(4) did not bar the assessee from claiming deduction under Section 80P(2), and the assessee was entitled to the exemption.

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